"Life is Just Brighter" in a $1.2m Distribution Business

Yeah, yeah. It's the, one of the biggest struggles in the first year was when trying to figure out how to grow revenue. And you know my main focus in the first year was through service was growing the equipment repair side because the material to grow a commodity based business is, is difficult just because the, the old adage is, you know, what's your price? Right.

It's, it's just a price competitive thing and they'll, they'll pretty much say what's your pricing compared to the largest competitor that I know of. And then, and then it's the battle of trying to deliver the whole value of. We also have equipment repair, rental, we have the tools, we sell equipment and then the materials.

And you know, the second year has definitely gone off to really good point versus the growth of growing the commodity side in the first year.

Great. Well, we're going to hear a bunch of your, what you've done as owner. But I, before we get there I want to hear about the price of the business and how you structured the deal. There's some, some interesting nuggets in here. So what was it selling for?

I don't remember. Yeah, I remember what, what it said on biz by sell. But I do know I bought it for 536. So the market at SDE was about 270.

I was underwriting it at about 250. So that's about two and a quarter. I knew that these businesses would sell two to three times.

I definitely want to be on the lower end of that. I was pretty much looking at what was the DSCR coverage. I want to be at least 2 times and then so my DSCR was so 240 as far as the headline SD that I was underwriting to.

But taking out the projected salary for myself, about 60 grand. That was about in the high one hundreds and my PNI was just below 100. So my DSCR coverage was just over two times which I was comfortable with.

I was not willing to go below that just because that's the cushion that I, that I wanted. So. And I knew it was going to be in the, the low twos From a multiple perspective. So that's what I ended up purchasing it for.

Let me, let me repeat some of that back for the audience. That was great, Joseph. So the, after the earnings, the SDE seller discretionary earnings that you had at around 250.

But then if you take that down another 60 to account for you owner operator's future salary or a future GM salary of 60,000, that gets you to around 190. Your principal and interest payments, your P and I payments for the SBA loan were going to be about 100 a year. So 190 is almost 2 times 100 which is, that's the debt service coverage ratio.